China’s Huawei sees international sales surge

Chinese networking and telecommunications equipment maker Huawei Technologies Co. Ltd. reported Wednesday that its international sales surged 90 percent during 2003, signalling the company’s emergence as an increasingly important player in the global networking and telecommunications equipment market.

Huawei’s international sales rose to $1.05 billion during 2003 from $552 million in 2002, an increase of 90 percent, the company said. International sales now account for 27 percent of the company’s total sales, it said.

Overall, Huawei’s total sales during 2003 reached $3.83 billion, up 42 percent from $2.7 billion in 2002. Helping to drive this figure higher, the company reported that domestic sales grew 29 percent in 2003, up from $2.15 billion to $2.78 billion.

Huawei attributed its growth in sales to strong demand for mobile, fixed-line and data communications equipment in domestic and international markets. Looking ahead, the company said 2004 will be “an even more important year” and demand for 3G (third-generation) mobile equipment, fixed-line and broadband products is expected to rise.

The strong growth that Huawei has seen in its international sales lays a strong foundation for the company to further expand its business outside China, said Davina Yeo, associate director of wireless and networking research at market analyst IDC Asia-Pacific.

“It’s a very big step for them,” Yeo said.

Huawei has done particularly well in developing countries where the company has sought to compete against multinational equipment vendors by offering lower prices, Yeo said. However, the company will have a harder time in developed countries, where companies and operators see cost as just one factor when making equipment purchasing decisions, she said.

Nevertheless, Huawei is seen as a future competitor to multinational equipment vendors in these markets, Yeo said.

That threat has not been lost on Huawei’s rivals. Huawei grabbed headlines in the U.S. last year when rival vendor Cisco Systems Inc. sued for an injunction against the company in the U.S., alleging that Huawei had pirated code used in Cisco’s IOS software and copied material from Cisco owners manuals.

The two companies agreed in October to a stay of litigation. Under that agreement, a preliminary injunction issued against Huawei will remain in effect and Huawei has agreed to make changes to its router software code.

Looking ahead, Huawei is well positioned to continue to expand its international sales and will be an increasingly important player in the networking and telecommunications industry, Yeo said.

“You’re going to be seeing a lot of more of them,” she said.